By Steve Hayes, Chairman and President – Americans for Fair Taxation
THE OPPORTUNITY ZONE–HOW THE SWAMP BRIBES THE WEALTHY
The 2017 Tax Cut and Jobs Act created opportunity zone investments and tax benefits for those investing in them. While this sounds good—use the income tax code to help bring investments to needy areas– it is really designed to bribe higher income people.
This information is provided by the IRS:
An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.
Opportunity Zones are designed to spur economic development and job creation in distressed communities.
Opportunity Zones provide tax benefits to investors. First, investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026. If the QOF investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain. If held for more than 7 years, the 10% becomes 15%. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.
WHO INVESTS IN OPPORTUNITY ZONES AND WHAT DO THEY RECEIVE?
The question to ask when you look at gifts from the Swamp and their allies in Congress, like the opportunity zone legislation, is, “Who benefits?” This is an easy answer.
The people who benefit are the people who have made sales of assets and have capital gains. For example, a person selling Apple stock in April of 2019 and receiving a $10 million capital gain will ordinarily owe approximately $2 million in U.S. capital gains tax. Then the person will have $8 million to reinvest.
This same person can invest the $10 million in an opportunity zone property in May of 2019 has these results…
